How to build a company and flip it for $12 million

http://www.business2.com/b2/web/articles/0,17863,696229,00.html?cnn=yes

The above article from Business 2.0 is well worth reading (but hurry because they have a habit of posting articles and quickly limiting full access to paid subscribers).

It is about a new trend in software development: building a company quickly and flipping it. The key point is that lots of developers now are finding niches to add to products of larger companies, and then getting bought out for lots of money.

The strategy is to start small and cheap, invest 12 months in product development, 12 months in sales and marketing, and then either sell the company or move on to another idea.

So now you have to market not only your product, but also your enterprise. And this means thinking ahead of product ideas that have natural corporate buyers.

So check out this article, and I’d appreciate posts from anyone on the path of following this strategy….

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  • JMorrow

    Yup. It only makes sense. Much less hassle, much less expensive, and much faster delivery of profit.

    Here’s a strategy that ties into that one: develop a free version of another company’s product and let them buy your company to get rid of you. People do it to Microsoft all the time.

    Anyway, thanks for posting the article, Andrew. I love reading things like this.

  • http://www.chadbishop.com frostproof

    Thanks for pointing this article out Andrew!

    A Tip: To save this article I clicked on the “format for print” link, which condenses it entirely onto one page. I then saved it as a PDF. I use OS X, where the normal print feature, has “Save as PDF” option.

    I’ve also read nothing but good reviews lately on the new Guy Kawasaki book “The Art of the Start.” istockphoto.com is running a special on it! Ordering a copy for myself today!

  • http://www.dkdesignco.com ant1832

    The stories in that articles are really inspiring. Thanks for pointing it out.

  • Stas

    Be careful, Guy Kawasaki’s book is ways cheaper from Amazon rather than from istockphoto.com

  • Hormone

    In reference to frostproof’s comment the same is possible within any application for Windows. All you have to do is install the free utility pdf995 (just add .com to find the webpage – they also have other utilities for PDF’s).

    hanks for the heads-up Andrew! What a concept!

  • DLG_1

    wow! I’ve been spending the past 5 months thinking of ideas for a small business with an exit strategy, similar to that detailed in the article.

    after reading, i’m more motivated than ever…and finally tonight I thought of the perfect project!!!

    I’ll let you guys know if I ever get rich.

    :-D

    regards,
    DLG

  • runsamok

    Hello! Reading your article makes me want to learn how to develop software! =)

  • http://www.SitePoint.com Matt Mickiewicz

    I don’t think you even have to knwo how to develop software to take advantage of this. Come up with an idea, hire a team, and execute.

  • http://www.sarote.com Agitator

    Me thinks I’ve been going about this all the wrong way. I’m structured by nature and tend to overthink the details. Time to get to work and worry about the details later. Great read! Thanks Andrew!!!

  • Dorsey

    This sounds like dot-com redux – looking for the pot of gold by sitting around thinking about it real hard, rather than building a business the traditional way. What’s different this time around? Having been down this road, I can tell you it’s not as easy as it sounds. As many investors (VC and angel) have told me, you need more than a killer idea this time around, you need a fully-formed product with a solid customer base, and a track record of steady month-to-month and quarter-to-quarter revenue growth (not just sales) before anyone’s going to take you seriously, much less throw a seven-figure offer at you.